Omnicom and Publicis, the world's second- and third-biggest advertising companies, have agreed to merge, people familiar with the situation said.

Omnicom Group Inc. and Publicis Groupe SA, the world's second- and third-biggest advertising companies, have agreed to merge, creating what would be a $35 billion behemoth, said people familiar with the situation.

The boards of both companies have approved the deal, the people said, which is expected to be announced Sunday in Paris, where Publicis is based. Publicis scheduled a news conference for 2 p.m. on Sunday for a "major...